SPX 5635 was an early potential target on a 0 DTE basis, and we did begin with a nice rally (and recovery) right out of the gate. However, this rally stalled and indices reversed completely, dropping sizably before stabilizing.
While indices never fulfilled the early target shown by 0 DTE GEX, we have the context of what was shared in yesterday’s newsletter: Negative divergences and several reasons to not be too comfortable holding long or ignoring any need for protection. The larger timeframes (daily and weekly, for example) tend to hold more sway than intraday trading.
SPX showed a basically perfect rejection of the upper Keltner channel, a logical place to see a reversal, though it’s not necessarily required. Does SPX continue lower to the next area of support almost 100 points lower, or does it never make it that far down?

We know SPX and SPY share similar charts, but let’s look at how each are structured in terms of GEX, which is interestingly different this time around.
We have SPX, which shows some room to the upside at 5750 or greater. We also have SPY, which shows very little room to the upside without bringing about a potential reversal lower. Shouldn’t one of these be right, and the other wrong? Yes, I would say so. Which one? I am not sure how to answer that question. But I know SPX over time has served me well when there is some disagreement between SPX and SPY.

One interesting trend to watch that might signal some sort of move toward value is this comparison of SPY and RSP, the equal-weighted index. While SPY is outperforming and still doing well, it’s worth mentioning that RSP finally climbed to exceed prior RSP highs, so at least that’s a step in the right direction.

Without spending much time on IWM, once the gap was closed yesterday, IWM decided it was time for a nap, closing lower than the prior day’s close. Now we will see if we head toward the 205 area or lower, or continue the march higher.

QQQ is very similar to SPX, including reaching the upper chanel (almost!) and rejecting there to create a doji. Does this doji signal reversal which also coincides with the upper Keltner? It’s possible, and we did just complete a very large positive move, but one other component I’m watching is the Hull Moving Average, which is climbing higher but it has not yet reached the price where price would be below the Hull. So maybe we have a few more days? I’m not going to be placing big bets either way.

QQQ GEX continues to decline, reaching a very neutral 218 million.

With VIX expiration early tomorrow morning, and a fairly big green day for the VIX today, I wouldn’t be surprised to see this volatility rebound continue. 18 is overhead, but it does look like strong resistance approaching 19. 15 and 17 strikes appear to be the most in focus for tomorrow.

After the expiration, we do have a 20-year bond auction at 1pm, and FOMC minutes at 2pm. Hopefully we will see GEX clues on a 0 DTE basis that will help us to have conviction regarding what comes next.
Many cycles and fractals exist in markets and let me be the first to point out that I don’t see the dates perfectly aligning as the X screenshot below implies (markets this year technically didn’t top on the 17th, though it was within a day of it), so take this prediction with a grain of salt. The implication is that markets might actually NOT like rate cuts, which could send the market plunging.

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VIX Expiration Wednesday

Thursday’s Preview: Is Resistance Futile?